A lender requires a 1.20 debt coverage ratio as a minimum. If the annual net operating...
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A lender requires a 1.20 debt coverage ratio as a minimum. If the annual net operating income of a property is $60,000 which increases at a rate of 2% per year. With an annual interest rate of 10% for a partially amortizing loan of three years with a balloon payment of $40,000, what is the maximum amount of loan the lender would allow if the property is held for three years and will sell for nothing at the end? The loan has annual payments. A lender requires a 1.20 debt coverage ratio as a minimum. If the annual net operating income of a property is $60,000 which increases at a rate of 2% per year. With an annual interest rate of 10% for a partially amortizing loan of three years with a balloon payment of $40,000, what is the maximum amount of loan the lender would allow if the property is held for three years and will sell for nothing at the end? The loan has annual payments.
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Answer rating: 100% (QA)
To calculate the maximum loan amount the lender would allow we need to consider the debt coverage ratio DCR and the cash flow generated by the propert... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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